In survey after survey of financial professionals such as investment advisors, private bankers and insurance agents, we find that their number one concern is sourcing new clients. It's not just about more bodies. What all these rofessionals are looking for is a constant flow of high-quality clients. High quality can most often be translated as high net worth, and the higher the net worth, the higher the quality.
Whether it's investment management or life insurance, for instance, all providers are replaceable. There are providers that are clearly superior to their peers. But just as the brightest high school minds gravitate to top-notch schools, only to rediscover themselves as merely average, the best advisors gravitate to the upper echelon of the market and find themselves replaceable. For this reason, and many others, the lynchpin of success is very dependent on who finds the prospect-preferably a wealthy prospect-and converts him or her into a client. This dynamic is accelerated by the fact that, in many respects, clients are unable to accurately judge the performance of these advisors.
Sourcing New Clients
There are a lot of ways to bring in new clients. What's so amazing is that all of them can work. We know a few investment advisors, for instance, who employ direct mail with good results. We're even seeing advisors getting new clients through social network marketing.
While most any strategy can produce new clients once in a while, a few approaches enable advisors to garner new clients on a much more consistent basis. Our research with advisors as well as an array of professionals over the last quarter century has consistently identified two approaches as better than all others. Referrals, either from clients or from professionals such as accountants and attorneys working with the wealthy, are unquestionably the most effective ways to build a high-net-worth practice.
In workshops and presentations, we often ask the audience which of the two referral approaches yields better results. The answer we usually get is client referrals. Almost all advisors have received a solid number of referrals from their satisfied clients. But, only a relatively small percentage of advisors have been successful getting referrals from non-competing professionals (who we'll refer to as "influencers".)
This could lead one to believe that client referrals are the best way to grow a business. But when you dig a little deeper, this proves not to be the case. When we ask where their most profitable clients came from, advisors commonly say influencers. Based on our research and our experience, we've drawn two conclusions: One is that the best new clients come from influencers. The second is that most advisors have a limited understanding of how to influence influencers.
Influencers can provide a steady stream of terrific introductions to wealthy individuals motivated to work with you. Client referrals can help grow a practice but they pale in comparison to referrals from influencers. Of course, much depends on whether an advisor is adept at creating strategic relationships with select influencers.
Building a relationship with an influencer is a multifaceted process. We have identified three critical steps to building a strategic partnership:
1. Rapport: It's critical that the two professionals have business chemistry. Can they work together? Do they have mutual trust? Is there bilateral faith in each other's technical competency and personal integrity?
2. Potential: Does the influencer have clients you would like to have as clients of your own? Also, does he or she have a willingness and ability to refer?